Dáil Éireann Debate, Tuesday - 18 May 2021
293. Deputy Carol Nolan asked the Minister for Finance if his Department has contracted accountancy firms or accountancy consultants with respect to the legislative reform of the way investment funds operate within the State particularly with respect to the purchase of housing or residential dwellings from 1 April 2021 to date; and if he will make a statement on the matter. [25694/21]
View answerThe Department of Finance has not contracted the services of accountancy firms or accountancy consultants with respect to the legislative reform of the way investment funds operate within the State with respect to the purchase of housing or residential dwellings, as described by the Deputy.
Institutional investment in the residential property market is critically important to ensure the on-going supply of housing. However, it represents just one part of a multi-pronged approach to addressing our housing issues. Rebuilding Ireland identified the encouragement of the build-to-rent sector as a key priority in improving the supply of accommodation in urban areas along with the professionalization of our rental sector. The forward investment provided by institutional investors provides essential capital for this sector.
This is particularly the case in relation to apartments, where the volume of investment by institutional investors has coincided with a significant increase in output. Apartments accounted for 19 per cent of all completions last year, an increase from 12 per cent in 2016. According to CBRE, the level of forward commit investment by institutional investors (i.e. the provision capital to fund the construction of new dwellings) totalled €2.07bn in 2019 and 2020 (just over 50 per cent of their total investment in the market).
In the aftermath of the property crash, institutional investors facilitated the completion of many residential and commercial developments. In more recent years, institutional investors have provided essential forward-funding for the development of apartment buildings.
However, the bulk purchase of completed homes by institutional investors is a matter of concern, and it is not intended that such investors should be in competition with individual buyers for completed homes. The government is working to develop targeted measures to address this issue, and to ensure institutional funding is directed towards generating real additional supply for Irish households.
Furthermore, while it is important to facilitate institutional investment through appropriate regimes it is equally important to ensure that, where such investment brings a profit, a fair share of tax is paid.
In recent Finance Bills, I have made significant changes to the taxation of funds investing in Irish property, in particular Irish Real Estate Funds, to ensure that appropriate tax is collected. As with investment funds generally, tax occurs primarily at the level of the investor rather than within the fund, but there is a withholding tax on distributions to investors to ensure collection of tax revenues. The increase in tax receipts since these changes were introduced shows the effectiveness of these measures.
